[Federal Register Volume 61, Number 20 (Tuesday, January 30, 1996)]
[Notices]
[Pages 3067-3069]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-1673]
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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-21700; 812-9928]
Van Kampen American Capital Global Managed Assets Fund, et al.;
Notice of Application
January 24, 1996.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of application for exemption under the Investment
Company Act of 1940 (the ``Act'').
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APPLICANTS: Van Kampen American Capital Global Managed Assets Fund, Van
Kampen American Capital Life Investment Trust, Van Kampen American
Capital World Portfolio Series Trust (collectively, the ``Funds''), Van
Kampen American Capital Asset Management, Inc. (the ``Adviser''), John
Govett & Co. Limited (``Govett''), and John Govett Holdings Limited
(``Govett Holdings'').
RELEVANT ACT SECTIONS: Order requested under section 6(c) of the Act
for an exemption from sections 15 (a) and (c) of the Act.
SUMMARY OF APPLICATION: Applicants request an order that would permit
the implementation, without shareholder approval, of new sub-advisory
agreements (each a ``New Sub-Advisory Agreement'') for a period of up
to 120 days following the termination of the former sub-advisory
contracts on December 29, 1995 (each a ``Former Sub-Advisory
Contract'') (the ``Interim Period''). The order also would permit the
sub-adviser to receive from the Funds fees earned during the Interim
Period after shareholders have approved the New Sub-Advisory
Agreements. The order further would allow the implementation, without
board of trustee approval, of the New Sub-Advisory Agreements, for a
limited period of time.
FILING DATES: The application was filed on December 28, 1995, and
amended on January 23, 1996.
HEARING OR NOTIFICATION OF HEARING: An order granting the application
will be issued unless the SEC orders a hearing. Interested persons may
request a hearing by writing to the SEC's Secretary and serving
applicants with a copy of the request, personally or by mail. Hearing
requests should be received by the SEC by 5:30 p.m. on February 19,
1996, and should be accompanied by proof of service on applicants, in
the form of an affidavit or, for lawyers, a certificate of service.
Hearing requests should state the nature of the writer's interest, the
reason for the request, and the issues contested. Persons who wish to
be notified of a hearing may request notification by writing to the
SEC's Secretary.
ADDRESSES: Secretary, SEC, 450 Fifth Street NW., Washington, DC 20549.
Applicants, Transco Tower, 2800 Post Oak Boulevard, Houston, TX 77056.
FOR FURTHER INFORMATION CONTACT:
Elaine M. Boggs, Staff Attorney, at (202) 942-0572, or Alison E. Baur,
Branch Chief, at (202) 942-0564 (Division of Investment Management,
Office of Investment Company Regulation).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained for a fee at the
SEC's Public Reference Branch.
Applicant's Representations
1. Each Fund is an open-end management investment company
registered under the Act. The Adviser serves as investment adviser to
each Fund and has engaged Govett to serve as subadviser in connection
with non-U.S. securities held by the Funds pursuant to the Former Sub-
Advisory Contracts. Govett is a United Kingdom corporation that is
registered under the Investment Advisers Act of 1940 as an investment
adviser.
2. On December 7, 1995, the former ultimate parent of Govett,
London
[[Page 3068]]
Pacific Group Limited, entered into a sale and purchase agreement (the
``Sale Agreement'') with Govett Holdings. Under the Sale Agreement,
Govett Holdings, an indirect newly-formed majority owned subsidiary of
Allied Irish Banks p.l.c., acquired all of the outstanding capital
shares of Govett. Govett Holdings has represented to the Adviser and
the Funds' board of trustees that it does not intend to make any
significant changes in the way Govett conducts its business.
3. The Sale Agreement was consummated on December 29, 1995,
immediately after which the Former Sub-Advisory Contracts terminated.
It is anticipated that proxy materials soliciting shareholder votes
approving the New Sub-Advisory Agreements will be mailed to
shareholders on or about February 5, 1996. Shareholder meetings are
scheduled to take place on or about March 14, 1996. The terms and
conditions of each New Sub-Advisory Agreement are identical in all
respects to those of the Former Sub-Advisory Contracts, except for the
effective and termination dates and a fee escrow provision. The New
Sub-Advisory Agreements do not contemplate any changes in the nature of
the service provided by Govett or the compensation to be paid by the
Adviser to Govett.
4. On December 19, 1995, the board of trustees of each Fund
approved the New Sub-Advisory Agreements between Govett and the
Adviser. However, due to weather conditions, one of the non-interested
trustees was unable to be present at the meeting and could only
participate by telephone. Because a sufficient number of non-interested
trustees was not present at this meeting, the New Sub-Advisory
Agreements remain subject to approval by the non-interested trustees at
in-person meetings. These meetings have been scheduled for January 25,
1996. At these meetings, it is anticipated that the trustees will
confirm their approvals of the New Sub-Advisory Agreements on the basis
that they are in the best interests of the Funds' shareholders and the
interests of the Funds and their shareholders will not be diminished as
a result of the transactions. Thus, the New Sub-Advisory Agreements
should be recommended for approval by the Funds' shareholders.
5. The portion of the advisory fees received by the Adviser from
each Fund and payable to Govett for services rendered during the
Interim Period will be maintained in an interest-bearing escrow
account. Amounts in the account will be paid to Govett only after
approval by the non-interested trustees at the January meetings and by
the shareholders of the New Sub-Advisory Agreements and receipt of the
requested exemptive relief. The escrow agent would release the monies
in each account as provided above, only upon receipt of a certificate
of an officer of the Fund (none of who is an affiliate of Govett)
stating, in the case where the monies are to be delivered to Govett,
that the New Sub-Advisory Agreements have received the requisite non-
interested trustee and shareholder votes or, in the case where the
monies are to be returned to the Funds, that the Interim Period has
ended. Before any such certificates were sent, the board of trustees of
the relevant Fund would be notified.
Applicants' Legal Analysis
1. Applicants seek an exemption pursuant to section 6(c) from
section 15(a) of the Act to permit the implementation, without
shareholder approval, of the New Sub-Advisory Agreements during the
Interim Period. Applicants also request relief so that Govett may
receive all fees earned under the New Sub-Advisory Agreements during
the Interim Period if and to the extent they are approved by the
shareholders of a Fund. Applicants also seek relief from section 15(c)
of the Act to permit the implementation of the New Sub-Advisory
Agreements before approval by the board of trustees, which is expected
to be given on January 25, 1996.
2. Section 15(a) prohibits an investment adviser from providing
investment advisory services to a registered investment company except
under a written contract that has been approved by a majority of the
voting securities of such investment company.
Section 15(a) further requires that such written contract provide
for its automatic termination in the event of an assignment. Section
2(a)(4) defines ``assignment'' to include any direct or indirect
transfer of a contract by the assignor. The consummation of the Sale
Agreement resulted in an ``assignment,'' within the meaning of section
2(a)(4), of the Former Sub-Advisory Contracts, thereby resulting in the
termination of each Former Sub-Advisory Contract, according to its
terms.
3. Section 15(c) requires that all investment advisory contracts be
approved by a majority of an investment company's trustees who are not
interested persons of the investment adviser at an in-person meeting
called for the purpose of voting on the approval of the advisory
contract.
4. Section 6(c) provides, in relevant part, that the SEC may,
conditionally or unconditionally, by order, exempt any person or class
of persons from any provision of the Act or from any rule thereunder,
if such exemption is necessary or appropriate in the public interest,
consistent with the protection of investors, and consistent with the
purposes fairly intended by the policy and provisions of the Act.
Applicants submit that the requested relief meets this standard.
5. Applicants believe that the requested relief is necessary, as it
would permit continuity of management notwithstanding the sale of
Govett and the resulting assignment of the Former Sub-Advisory
Contracts. Applicants state that obtaining shareholder approval prior
to the consummation of the Sale Agreement was not possible due to the
short period of time between the execution of the Sale Agreement and
the anticipated closing date of the transaction. In addition,
applicants believe that the Funds made a good faith effort to comply
with section 15(c) by holding board of trustees meetings on December
19, 1995, which did not have the required number of non-interested
trustees present due to factors beyond the Funds' control, namely the
weather. Further, applicants state that the scope and quality of
services provided by Govett to the Funds during the Interim Period will
not be diminished, and each Fund will operate under its new Sub-
Advisory Agreement, which is substantially the same as its Former Sub-
Advisory Contract. Applicants believe that depriving Govett of fees for
the Interim Period would be a harsh result and would serve no useful
purpose.
Applicants' Conditions
Applicants expressly consent to the following conditions in
connection with the request for exemptive relief:
1. The New Sub-Advisory Agreements will have the same terms and
conditions as the Former Sub-Advisory Contracts, except for their
effective and termination dates and fee escrow provisions.
2. The portion of the Adviser's fee payable by the Adviser to
Govett under the New Sub-Advisory Agreements will be placed into
interest-bearing escrow accounts by the Adviser immediately after
receipt. The escrow arrangements will be established and maintained as
follows: (a) Fees payable to Govett during the Interim Period under the
New Sub-Advisory Agreements would be paid into interest-bearing escrow
accounts maintained by the escrow agent; and (b) the amounts in the
escrow accounts (including interest earned on fees paid) would be paid
to Govett on behalf of a Fund only upon approval by
[[Page 3069]]
the non-interested members of the boards of trustees at in-person
meetings and the Funds' shareholders of the New Sub-Advisory Agreements
or, in the absence of such approval, returned to such Fund.
3. The Funds will hold in-person trustees' meetings in January,
1996 to confirm their December approval of the New Sub-Advisory
Agreements. In addition, shareholder meetings will be held in March,
1996 to vote on the approval of the New Sub-Advisory Agreements, and
such approvals will be obtained on or before the 120th day following
the termination of the Former Sub-Advisory Contracts.
4. Govett Holdings will bear the costs of preparing and filing this
request for exemptive relief and the costs related to the solicitation
of shareholder approval of the Funds' shareholders necessitated by
consummation of the Sales Agreement.
5. The Adviser will take all appropriate steps to ensure that the
scope and quality of sub-advisory services provided to the Funds by
Govett during the Interim Period will be at least equivalent, in the
judgment of the respective boards of trustees, to the scope and quality
of services previously provided by Govett. If there is a material
change in the personnel providing material services to the Funds during
the Interim Period, Govett and the Adviser will notify the respective
Boards of Trustees of the affected Funds to ensure that they, including
a majority of the non-interested trustees, are satisfied that the
services provided will not be materially diminished in scope and
quality.
For the Commission, by the Division of Investment Management,
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-1673 Filed 1-29-96; 8:45 am]
BILLING CODE 8010-01-M